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Why credit unions and small businesses are beating out big banks

Community-based capitalism offers an exciting new model for American prosperity and a way out of the current economic morass. Constructive Capitalism is shareable, local, and sustainable. Examples of its impact abound.

By Billy Parish / February 27, 2012

Mitt Romney addresses the Detroit Economic Club during a campaign stop at Ford Field in Detroit Feb. 24. As states like Michigan struggle with high unemployment, op-ed contributor Billy Parish suggests a new model for community-based capitalism and job creation.

Rebecca Cook/REUTERS


Oakland, Calif.

As Republican presidential candidates campaign in states with high unemployment rates like Florida, Michigan, and soon, Ohio, it’s a fair question to ask what business is doing to us as well as for us. Rising inequality and unemployment above 8 percent have left Americans frustrated, wondering whether capitalism is capable of supplying the jobs we need along with the community concern that we want.

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The answer to both is yes. A new economy is emerging, a kind of constructive capitalism that offers an exciting new model for American prosperity and a way out of the current economic morass. Constructive Capitalism is shareable, local, and sustainable. Examples abound.

Let’s start with the State Bank of North Dakota. Formed in 1919 during an earlier populist revolt by farmers across the northern plains, it’s now the destination for cringing Wall Street bankers eager to discover how it was able to earn record profits during the financial crisis as its private-sector corollaries lost billions. The answer – that the bank invests its deposits in programs designed to spur North Dakota’s economy – must come as a shocker to the Wall Street crowd accustomed to investing in what are often planet-killing projects or companies that send jobs overseas.

North Dakota may have America’s only state-owned bank, but it is far from being the only community bank to flourish despite the financial crisis. Community banks and credit unions all over the country are growing their market share and doing it in a way that benefits the communities they serve. In just the last few months, more than 650,000 people opened new credit union accounts, depositing some $60 billion.

The recent growth could cause the credit union system to have more than $1 trillion in total assets, according to the Credit Union National Association chief economist Bill Hampel. Investment banks still have important roles to play in the economy, but we can look to more community-based models for economy growth. And big banks may follow suit.

In Cleveland, Ohio, the Evergreen Cooperative, a group of worker-owned green businesses, includes a laundry business that services the big schools and hospitals in the city, a solar installation and energy efficiency company, and a commercial greenhouse that will produce 5-6 million heads of lettuce and 300,000 pounds of herbs each year.

Finally, in Oakland (where I live), there’s a company called Sungevity that has helped thousands of people nationwide put solar panels on their roofs at no upfront cost through an innovation called a “solar lease.”


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